Salzman, Diego ; Trifan, Emanuela (2008)
Emotions, Bayesian Inference, and Financial Decision Making.
Report, Erstveröffentlichung
Kurzbeschreibung (Abstract)
This paper presents a model in which rational and emotional investors are compelled to make decisions under uncertainty in order to ensure their survival. Using a neurofinancial setting, we show that, when different investor types fight for market capital, emotional traders tend not only to influence prices but also to have a much more developed adaptive mechanism than their rational peers, in spite of their apparently simplistic demand strategy and distorted revision of beliefs. Our results imply that prices in financial markets could be seen more accurately as a thermometer of the market mood and emotions rather than as simple informative signals as stated in traditional financial theory.
| Typ des Eintrags: | Report |
|---|---|
| Erschienen: | 2008 |
| Autor(en): | Salzman, Diego ; Trifan, Emanuela |
| Art des Eintrags: | Erstveröffentlichung |
| Titel: | Emotions, Bayesian Inference, and Financial Decision Making |
| Sprache: | Englisch |
| Publikationsjahr: | 2008 |
| Ort: | Darmstadt |
| Reihe: | Darmstadt Discussion Papers in Economics |
| Band einer Reihe: | 166 |
| URL / URN: | http://tuprints.ulb.tu-darmstadt.de/4766 |
| Kurzbeschreibung (Abstract): | This paper presents a model in which rational and emotional investors are compelled to make decisions under uncertainty in order to ensure their survival. Using a neurofinancial setting, we show that, when different investor types fight for market capital, emotional traders tend not only to influence prices but also to have a much more developed adaptive mechanism than their rational peers, in spite of their apparently simplistic demand strategy and distorted revision of beliefs. Our results imply that prices in financial markets could be seen more accurately as a thermometer of the market mood and emotions rather than as simple informative signals as stated in traditional financial theory. |
| Freie Schlagworte: | Judgement under uncertainty, Bayesian Inference, Behavioral Finance, Decision Making, Emotions |
| URN: | urn:nbn:de:tuda-tuprints-47665 |
| Zusätzliche Informationen: | JEL classification: G1; Erstellt März 2006 |
| Sachgruppe der Dewey Dezimalklassifikatin (DDC): | 300 Sozialwissenschaften > 330 Wirtschaft |
| Fachbereich(e)/-gebiet(e): | 01 Fachbereich Rechts- und Wirtschaftswissenschaften 01 Fachbereich Rechts- und Wirtschaftswissenschaften > Volkswirtschaftliche Fachgebiete |
| Hinterlegungsdatum: | 31 Jan 2016 20:59 |
| Letzte Änderung: | 25 Okt 2023 09:36 |
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